The Green Neighborhoods Act includes the SAVE Act
While recent attention has focused on the infrastructure deal between President Biden and a bipartisan group of Senators, climate advocates should also pay attention to a new bill in the House of Representatives that would make homes more energy efficient, help owners and renters save on utility bills, create jobs, and fight climate change.
Sponsored by U.S. Rep. Ed Perlmutter of Colorado and three other Representatives, the Green Neighborhoods Act of 2021 includes several provisions. Top provisions include:
- Building upon years of groundwork laid by cities, counties, and states across the U.S. with leadership from IMT, the bill would require HUD-assisted multifamily buildings in the 38 jurisdictions with benchmarking and transparency laws to report their benchmarking data to HUD. HUD will analyze and publish the data and use this data to develop energy intensity targets for each climate zone and multifamily subcategory. HUD will also develop mechanisms to streamline data requests and sharing in collaboration with the Environmental Protection Agency ENERGY STAR program.
- It would require the U.S. Department of Housing and Urban Development (HUD) to create new energy efficiency standards and new financial incentives for new and existing homes and buildings that meet the standards.
- It also includes the SAVE Act, discussed below, which would address the blind spot to energy in federal mortgage origination rules.
Benchmarking HUD-assisted multifamily buildings
HUD spends more than $5b per year on utility costs in public and assisted housing. Inefficient buildings contribute to climate change and also to social inequity since housing is less affordable when high energy bills are factored in. This problem generally referred to as energy burden, falls disproportionately on communities of color. It is, therefore, critical that HUD leverages its regulatory might to ensure the benefits of energy efficiency can be realized by people living in affordable housing benefitting from HUD funds.
I hope that the bill will enable HUD to help utilities, their regulators, building owners, and ENERGY STAR to work together to streamline the process of utilities providing to owners aggregated whole-building utility consumption data to enable benchmarking of buildings. Since 2009, IMT has worked with the majority of the 38 jurisdictions that now have benchmarking laws that cover more than 11 billion square feet of buildings, and provide a useful beginning for reliable data that can help set much broader policies for building energy use.
The SAVE Act
When applying for a mortgage, a critical factor in determining whether a borrower can qualify is the ratio of the size of the loan to the appraised value of the home. Energy-efficient homes and homes with solar panels are more valuable because they save the homeowner on utility bills. Unfortunately, currently appraisals very rarely fully account for this value. As a result, the current mortgage system disincentives investments in efficiency and solar. Homebuilders spend less on efficiency because they worry that potential buyers will not qualify for larger mortgages to buy better homes. Homeowners hesitate to invest in improvements to their homes because they worry that they won’t recoup investments when they sell their homes. Everyone pays higher utility bills and billions of dollars of energy-saving, job-creating, climate-protecting investments never happen.
For the vast majority of mortgages, the process of qualifying are set by rules written by federal agencies and federally chartered lenders (Fannie Mae and Freddie Mac). The Sensible Accounting to Value Energy (SAVE) Act would fix this blind spot in federal mortgage rules by allowing people applying for mortgages to submit as part of their applications a HERS, Home Energy Score, or other approved third-party energy report. The value of the energy improvements would then be factored in to better reflect the true value of the home and make it easier to qualify for homes with efficiency and/or solar. So, the bill would make efficiency and solar investments more affordable, create jobs, and lower utility bills for years to come. In addition, in 2013, IMT’s landmark study with the University of North Carolina found that owners of energy-efficient homes were 32% less likely to default on their mortgages than peers with less-efficient homes.
IMT has long been involved in the SAVE Act, and I’m proud to have helped develop the concept and that I coined the term “SAVE Act.” While it was originally introduced as a bipartisan bill in 2011, was reintroduced in subsequent Congresses, and eventually passed the Senate as part of a broader energy bill, it never passed the House. This reintroduction—and hopefully its passage in both Houses of Congress—would be an overdue step forward for increasing access to more affordable homes..
This bill faces a steep climb in the current Congress. It’s likely that pieces of it may be incorporated into other bills. What’s notable, however, is that the federal government is increasingly prioritizing buildings, and building cash flows, as essential to a larger climate, jobs, and environmental justice strategy. This is only possible because of the work building energy work local governments have been doing for years, frequently in partnership with IMT. The quiet inclusion of efficiency and solar in federal affordable housing policy and in property valuation speaks to the success that IMT and its partners have had in making efficiency and renewable energy commonsense solutions to our greatest challenges.